Lessons in Leadership: How First Data Builds An Acquisition Pipeline Through Partnerships

When you’re a corporation with thousands of employees and numerous departments to manage, innovation is hard to nurture. Companies take different routes to find it — some open innovation centers and others send employees to accelerators to stay current. Global fintech leader First Data looks outside their organization, finding and partnering with emerging startups (and their products) to take their initiatives to the next level.

It’s a strategy that is becoming increasingly accepted. A recent study found that 67 percent of corporations prefer working with startups at earlier stages to explore new technologies and business models, with 23 percent who see this collaboration as mission critical.

“First Data is always looking for opportunities to enhance our technology so we can provide better solutions to our clients. Startups and other young companies sometimes have a very interesting approach to a problem,” says McCarthy.

First Data, which tackles e-commerce and financial solutions, has long had its eye on the startup world within their hometown of Atlanta and elsewhere. In the past few years, the Fintech giant acquired several startups to expand their payment offerings. Past additions include cardless mobile-based loyalty platform Perka and POS setup Clover, which helped First Data increase its reach into the mobile-centric payments space.

Leading up to each acquisition, First Data fosters a long-term partnership built on trust. A research team specifically focused on these efforts stays on top of trends and emerging tech. They have much to see and do: after all, 70 percent of all U.S. payments processed run through Georgia.

“First Data has a team based at our Atlanta headquarters that focuses specifically on innovation. It’s incredibly important in a fast-moving industry to stay ahead of the innovation curve,” says McCarthy.

“We have a Stanford adjunct professor leading our innovation efforts and implementing the best of Design Thinking. We also have a Business Development team who regularly engages with other organizations.”

This past spring, Acculynk, an Atlanta-based debit card acceptance and routing startup, caught the eye of that research team. The team realized that Acculynk’s unique approach to e-commerce and online debit payments would add another layer to First Data’s already successful routing tools. They dove into the online payments system.

Acculynk’s debit card acceptance technology aids merchants to process online debit payments through the most cost-effective debit network, helping them retain revenue and pay less per transaction. Along with this unique technology, the company had developed a True Debit gateway to decrease fraud rates and create a better customer payment experience.

Acculynk was CEO Ashish Bahl‘s third company. When he was ready to scale and distribute the product his team built, he knew to look for a buyer that could grow it and be strategic to its core business.

Acculynk had many offers on the table (including three Fortune 500 companies). But Bahl prioritized the product’s strategic place in the new company and his team’s wellbeing and fit in the new corporate culture.

“[We have a] very aggressive work ethic and [looked for] a very flat organization where we are not going to get slowed down. As we went through the prospective listed buyers, we found First Data as the perfect home,” says Bahl.

Throughout the acquisition process, Bahl kept his team — some of whom had worked for him at his past companies — informed of possible buyers as well as soothed their worries about the new company’s location and their career trajectory.

First Data announced the acquisition of Acculynk, along with expanded debit offerings, in March 2017.

Now that Bahl has joined First Data as an EVP, he expects this new product addition to not only fit right in with First Data’s strategic trajectory, but also help Atlanta maintain its place as a global leader in the payment industry.

“Some of the largest e-commerce merchants in the world are going to be using First Data’s technology.” says Bahl. “Our revenue per transaction are magnitudes higher than a standard credit card processing fee. We’re bringing into modern world a lot of these international networks, whether they are from Germany, Australia, or India.”

“All of that work is emanating out of Atlanta and it has a big effect in the city. It will continue to set a high bar for the Fintech industry,” says Bahl.

Earlier this month, First Data announced another acquisition — CardConnect, an advanced payments solutions that provides point-to-point encryption and tokenization. The company is one of First Data’s largest distribution partner and processes approximately $26 billion in volume annually from 65,000+ merchant customers.

“Each of our recent acquisitions, Acculynk and CardConnect, started with great partnerships. We worked with each other for years, knew each other’s teams, and shared similar visions for the market,” says McCarthy.